Wells Fargo & Co WFC:NYSE

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Wells Fargo Beats Street Forecasts For Q3 Results, Raises Dividend

2:53PM ET 10/14/2021 MT Newswires
Wells Fargo (WFC) released its Q3 results Thursday, posting earnings and revenue that topped Street projections and announcing a higher dividend of $0.20 per share compared with $0.10 per share in the preceding quarter.

The bank said Q3 diluted earnings climbed to $1.17 per share from $0.70 a year ago, exceeding the Capital IQ mean of $0.94. Revenue, meanwhile, slipped to $18.83 billion from $19.32 billion last year but still topped the $18.31 billion Street view.

Wells Fargo said Q3 net interest income fell 5% to $8.91 billion amid a decrease in loan balances that resulted from weaker demand, elevated prepayments and lower yields on earning assets. Non-interest income also slightly slipped to $9.93 billion due to a decrease in mortgage banking revenue and lower gains from the sale of securities, among others.

Average loans were lower at $854 million in Q3, compared with $931.7 million a year ago, while average deposits rose to $1.45 billion from $1.4 billion in Q3 2020, according to the company.

Still, the figures topped expectations. Analysts polled by Visible Alpha were expecting total loans of $853.3 million and average deposits of $1.44 billion.

Apart from economic recovery, Wells Fargo Chief Executive Charlie Scharf said the period saw low charge-offs, a stable net interest income, and the company's first increase in period-ends loans since Q1 2020. Scharf also noted the $1.7 billion pre-tax reduction in Wells Fargo's allowance for credit losses during the period.

The total allowance for credit losses fell year-over-year to $14.7 billion from $20.5 billion from the same quarter last year, the company said. Analysts polled by Visible Alpha were expecting a narrower decline to an allowance of $15.5 billion.

Wells Fargo reported net charge-offs of $257 million in Q3, down from $731 million during the same quarter in 2020 and below expectations in a Visible Alpha survey for $478.5 million.

However, the bank recorded a $250 million, or $0.05 per share, operating loss relating to enforcement actions that the Office of the Comptroller of the Currency announced in September. The OCC imposed a $250 million fine and issued a cease and desist order against Wells Fargo Bank for failing to adequately repay customers who were charged unwarranted fees and establish an effective home lending loss mitigation program.

Scharf said the company's "significant deficiencies" remain a top priority and that Wells Fargo has already implemented operational and cultural changes to correct its practices though it may still see "setbacks along the way."

Price: 45.20, Change: -0.85, Percent Change: -1.86